Medicare beneficiaries will pay less for their Part B premiums next year, the first reduction in a decade.
Other Medicare costs, such as Part A deductibles, are rising.
Here’s how it breaks down.
Medicare Part B premiums to drop in 2023
The standard Medicare Part B premium will be $164.90 per month in 2023, down from $170.10 in 2022.
This is $5.20 less per month, or a decrease of 3%.
It’s been a decade since Part B premiums declined instead of increasing.
The Part B deductible — the cost of enrollees paid out-of-pocket each year before Medicare begins paying their share — is also declining next year, from $233 in 2022 to $226 in 2023.
Medicare Part B is a fundamental part of the federal insurance program, which covers doctor visits, outpatient surgery, medical equipment, and more. It charges the beneficiaries a monthly premium for coverage and is usually deducted from the Social Security check.
The premium reduction is good news — but it comes on the heels of the largest Part B premium increase in Medicare history. From 2021 to 2022, Part B premiums jumped $21.60 — or 14.5%.
Why are Medicare Part B premiums falling in 2023?
In 2021, a brand new Alzhimher drug called Aduhelm hit the market. The controversial infusion treatment came with a sticker price of about $56,000 a year.
Medicare wasn’t sure it would cover the new drug. Or how Medicare will pay for it.
To create a revenue safety cushion, the Centers for Medicare and Medicaid Services (CMS) increased everyone’s Part B premiums to cover projected spending on the drug in 2022 — just in case.
Ultimately, CMS decided to cover Eduhelm only in very limited circumstances. Medicare didn’t need that much extra money from Part B premiums, after all.
A CMS press release from 27 September said “less than anticipated spending on both Eduhelm and other Part B goods and services resulted in huge reserves.”
In May 2022, CMS recommended that any additional revenue go toward reducing Part B premiums for Medicare beneficiaries.
Still, the modest reduction beneficiaries will see next year (down from $5.20) is a fraction of the increase they made this year (from $21.60 from 2021).
Other Medicare Costs Changing in 2023
While the cost of Medicare Part B is decreasing, the cost of Medicare Part A is increasing.
Part A primarily covers hospital stays and skilled nursing facilities.
Most enrollees do not pay a monthly premium for Part A, but are charged a deductible for each hospital stay.
The Part A deductible is increasing by $44, from $1,556 in 2022 to $1,600 in 2023.
The sum insured for patient care is also increasing.
Patients hospitalized between days 61 and 90 will now have to pay a daily co-insurance of $400 plus $389. After 90 days of hospitalization, they would have to pay a co-insurance amount increased from $778 to $800.
2023 Medicare Costs at a Glance
Program 2023 Cost 2022 Cost Change
Medicare Part B Premium
$164.90 per month
$170.10 per month
Medicare Part B Deductible
$226 per year
$233 per year
Medicare Part A Deductible
$1,600 per year
$1,556 per year
Meanwhile, projected average premiums for both Medicare Advantage plans and Part D plans are expected to drop slightly in 2023.
Medicare surcharge will also be lower for higher income earners
High-income Medicare beneficiaries will pay less in additional Medicare premium fees in 2023 than this year.
Simply put, Part B and Part D premiums are linked to the beneficiary’s income. People with higher incomes pay higher than standard Medicare premiums, known as income-related monthly adjustment amounts, or IRMAAs.
According to CMS, only about 7% of Medicare enrollees pay IRMAAs.
In 2023, the income limit for IRMAAs is increasing and the monthly surcharge is decreasing.
These additional fees kick in for beneficiaries earning $97,000 (up from $91,000) for single tax filers and $194,000 (up from $182,000) for joint filers.
Once you exceed that limit, an additional $65 is added to your Part B premium, a reduction of $3 from 2022.
Meanwhile, the wealthiest older Americans — singles with an income of $500,000 or more and couples with an income of $750,000 or more — will pay an additional $395.60 per person, a decrease of $12.60 in 2022.
Medicare Open Enrollment Begins October 15
Each year, beneficiaries have a chance to compare plans and adjust their coverage during Medicare Open Enrollment. It runs from 15 October to 7 December.
CMS releases next year’s Medicare cost information prior to open enrollment so you can make an informed decision about your coverage options.
During open enrollment, you can:
Switch from Original Medicare to Medicare Advantage or vice versa. Switch to a different Medicare Advantage plan. Sign up for Part D if you didn’t enroll when you first became eligible. Change to a different Part D plan.
Any changes you make during open enrollment will be effective January 1, 2023.
If you’re happy with your Medicare coverage, you don’t need to do anything.
But if your Medicare Advantage or Part D plan is changing next year — or you feel like you’re paying too much for your coverage — buying one is a smart decision.
You can compare your coverage options using the online Medicare Plan Finder tool.
Have questions about signing up for a plan? The State Health Insurance Assistance Program, or SHIP, is a national network of trained volunteers that provides one-on-one support, counseling, and education to Medicare beneficiaries and their families.
Medicare is the largest federal health care program in the country. In 2021, it covered nearly 64 million people age 65 and older, as well as some young people with long-term disabilities – 19.3% of the US population, based on census data.
Rachel Christian is a Certified Educator in Personal Finance and a Senior Writer for The Penny Hoarder.
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